Saudi Arabia Levies Tax on Expat Families

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We’re all aware that most International Schools prefer not to hire ITs with kids and/or a trailing spouse, the obvious reason being the costs associated with relocating a family. Along this vein, Saudi Arabia has made teachers with dependents even less desirable by imposing a hefty “dependent tax” on family members accompanying expats working in the Kingdom. In other words, if you’re an expat working/teaching in Saudi Arabia you’ll pay a hefty, yearly tax to bring your family with you.

Here’s the skinny on the tax: As part of the government’s attempt to balance the budget, an expat working in the Kingdom with dependents will pay 1,200 Saudi riyal ($320 US dollars) per year, per dependent. Additionally, the “dependent tax” is set to increase yearly, reaching the equivalent $1296 US dollars yearly, per dependent. For a teacher with 3 dependents, $3888 is an astronomical yearly tax.

The future of the new “dependent tax” is uncertain, as many foreign workers have decided to send family members home, the consequence being that workers will most likely send money back home and not spend it in Saudi Arabia. It appears the plan may have unintended consequences and, as such, the tax may not be the answer to balancing a budget that’s been in suffering since the decline in oil prices.

ISR ask: What has been your experience with the new “dependent tax” and how are International Schools and teachers coping with this new expense? Are other countries targeting expats in an attempt to raise money?

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15 Responses to Saudi Arabia Levies Tax on Expat Families

Salaries in Saudi Arabia are tax free. So an ordinary classroom teacher gets about 65000 US. If you are a position or responsibility you get more. The scho I worked at also paid a flight allowance of 4000 US per year. You hot thst as of right. You chose whether you spent it or not. And that was per family member and pro rated fot children under 12. In addition there was a retention payment per teacher of 30 % of your base salary. So to me just under 4000 US for three children shouldnt be a big deal. Especially if you are a teaching couple.You also got your internet and television costs reimbursed. No power or water fees. At the time I was in my school the school was paying anyway. I was in Saudi 5 years and loved it.So its a market place If you want to have an amazing enriching cultural experience then embrace the country and its people. If you dont want to do that and are focussed only on the money then maybe you should go somewhere else. The other thing to bear in mind is that nonteaching spouses amd 3 children are barriers to jobs in a lot of countries. Sad but true.

I had to pay the dependent fees for multiple kids. It was alot and sucked! Our school never informed us about them until we asked them about them once we arrived and were informed about them. It sucks!

I taught in Saudi Arabia for 9 years, and it was mostly a very positive experience, and definitely a profitable one. My wages were generous, as well as for the parents of the students I taught. My first reaction when I read the article was that most of the parents that I know could easily afford an annual tax of $320 per child – they think nothing of spending more than that for a weekend in Bahrain. However, if it does increase to $1296, then I could see that posing a problem for employees with more than three children. I have been teaching internationally for over 20 years, and from my experience, international schools are eager to attract and keep the best qualified teachers, so my prediction is that the tax will be part of a teacher’s employment package if a school can afford it.

The issue is ” if the school can afford it” Some of the schools are not for profit. The economy in Saudi Arabia is not in good shape. 5% VAT will be added to most things in January 2018. The packages in Saudi Arabia are generous, but everyone is balancing the need to maximise income and minimise expenditure. The market will decide, but definitely, Saudi Arabia will not be such an attractive place for teaching families in the long term. There will be more singles and married couples, who will only stay a short time as opposed to families who are prepared to invest a longer time period in a school. Time will tell whether that will be a good thing or not. Big changes are coming and it will be interesting to see if they will benefit or disadvantage expat workers.

Schools currently hiring in Saudi seem to indicate that the family tax must be paid by the employee. Its too early to say but the top ISs may ease the burden. Also Saudi has introduced VAT/sales tax which will mean folks are more likely to take their wages elsewhere. If they start taxing remittances next as well you have to reconsider if Saudi is worth the bother.

Bank fees will have 5%VAT from Jan 2018′ so remittances sent home by bank transfer will attract an extra expense. One school in Saudi is not paying any benefits for trailling spouses and the employee is expected to cover all costs in the 2018-19 year but is giving benefits for children, so the situation is somewhat unclear.

Teachers with trailing spouses will be paying not only the tax but all other costs associated with dependents such as medical insurance and exit re-entry visas. Some of these costs will vary from school to school, so do your homework. The estimate at the moment is the annual cost will equate to one month’s salary.

Really? I’ll send my kids “home” rather than spend $320 yearly in taxes each to keep them with us? Hmmm… in a few years that might increase to $1296 each?

OK, let’s see… which American boarding school at $40K a pop should we apply to, to take care of the kids we don’t want to pay Saudi tax on? For our 3 kids that would work out to an “astronomical” yearly tax of $3888. The two of us make a combined $200,000 in Saudi Arabia, which clearly isn’t enough.

Home to the kids and to us is with their parents are. I’ve never read such a ridiculous post on ISR as this.

I did not identify the author of the article however, it seems that it might be prematurely inflamatory and does not appear to share whether the respected schools are prepared to pay for the proposed tax. However, as the article notes, not many international schools in the world are prepared to support a teacher with a family of three dependents. Although the author and some teachers seem to believe that it is outrageously unfair, it really is reality of economics, just like the way the world.